Blog: Microsoft is perfect example why executive pay is broken

Text message this morning from CNN: US unemployment hit 10.2% in October. Microsoft announced earlier this week another 800 employee layoffs to the 5,000 previously announced employee layoffs. If you look at Microsoft's financials you see why, a 14% revenue and 18% net income drop for the last reported quarter, on top of disappointing prior quarters. Meanwhile, Microsoft's top five executives are set to earn an estimated $US31 million in total pay for 2009. One the plus side, Microsoft's stock is starting to make a climb back, having come back from $US14.97 in March 09 to a close of $US28.47 in Thursday's trading. (Keep in mind the 52 week high is only $US29.35.) Much of that though is attributed to "efficiency gains", e.g. millions in cost cutting measures, a.k.a. layoffs, and a successful Windows 7 beta and launch.

It's easy to point at Wall Street, AIG and the banking sector and call foul when execs lavish themselves with big bonuses after receiving billions in taxpayer money to keep them afloat. But the same issues are present in the board rooms of our corporations. How can executives at corporations lavish themselves with huge payoffs when thousands of their employees are losing their jobs and stockholders are still smarting from record losses. Clearly our board of directors system in business is broken too, perpetuating the "executive club" mentality that their executives are too valuable to lose.

Where has any sense of social consciousness gone in our corporations? Many small businesses see part of the their role to employ people within the community they work and live. If that sentiment was ever present in our large corporations it's surely long gone now. Our biggest export from Corporate America these days seems to be jobs, not goods and services. We may be pulling out of this deep recession but improvements to many company's bottom lines are due to reduction in staff more than an increase in revenue.

Microsoft is facing its most grave threats ever, with Google Apps, Google Docs and Open Office swinging business users away from Microsoft Office, Apple Macs and Linux boxes more prevalent than ever, the iPhone long ago dethroned Windows Mobile and Google Android is ramping up, and open source is fueling so much of our Internet cloud infrastructure. Windows 7 may at least get Microsoft back on track with a decent end user OS, but that's merely to regain ground and make up for past mistakes. It will be a long time before Microsoft has truly recovered from Vista.

Should the top five executives at Microsoft really be pulling in $US31 million when the company is in the midst of layoffs and still hemorrhaging from competition that's stronger than ever? Maybe I'm being a idealist but nothing will change if we continue to keep our opinions to ourselves. Maybe what we need is just a little bit more idealism and care for each other.

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